Startups

4 financial reporting tips for startups

  • 4 min Read
  • September 17, 2018

Author

Escalon

Table of Contents

Running a new startup is tough. It takes long hours, lots of sweat equity, and tremendous planning.


While you may have a handle on getting your startup off the ground and bringing your products or services to market, do you know what you need to do when it comes to your finances?


One of the most important things you can do is prepare good financial statements. Why? It’s the only way you, your board, your staff, and your investors will know where you stand.


Good reporting helps you with financial analysis as well as your budgeting.


Let’s take a look at five financial reporting tips for startups


 #1: Choose the right financial reporting system



When it comes to reporting, you can choose between a cash system or an accrual accounting system.


For many startups, an accrual system works better because you can match expenses to revenue more effectively.


In order to truly understand the performance of your startup, you want to choose the right system for your needs. It’s worth noting that you might use a combination of both – cash accounting for your taxes and accrual accounting to help with decision making.


 #2: Create your internal controls



As you begin taking care of your finances, you want to set internal controls. This means establishing the procedures for your financial reporting processes.


Here are a few to consider:

  • Have multiple people attending to your financial tasks. For example, if one person handles your accounts payable, another person should record the transactions, and yet another should sign the checks.
  • From the beginning, make it clear that you or someone in an authority position will sign off on large transactions. You determine what “large” means.
  • Reconcile your balance sheet accounts monthly. Either do this in-house or outsource it.

These are very important to making sure your money is exactly where you think it is, and no one is misusing funds. It also ensures more accurate financial reporting.


Talk to us about how our CFO services can provide your startup with real-time financial reporting to make informed decisions.



 #3: Set deadlines



Often when new businesses begin, their financial reporting has a huge lag time. This isn’t helpful to you or your investors.


Insist on deadlines for your financial statements.


For example, you might request them within one week of the end of each month. This way, you have the information you need to make decisions and changes as needed.


You certainly don’t want your statements two or three months after the end of the reporting month. Even one month later lessens the value of the report.


Be firm, and whether you’re using in-house people or outsourcing your accounting, insist on a proper time frame for receiving your financial statements.


 #4: Prepare reports with investors in mind



Your financial statements are vital to your decision making, and good reporting is the only way for your investors to make sound decisions.


Make sure your reports attend to the following items for your investors.

  • Include all information your investors and creditors need.
  • Make sure your report includes fair value information so it’s easier to make financial decisions.
  • Include any changes in net assets and any changes in fair values.
  • Your cash flow statement is important because it provides the information you need to analyze your growth and project for the future.
  • Include disclosures as necessary.

Final thoughts



When it comes to financial reporting for startups, your system must be cohesive for it to work.


You want a system that’s transparent. Anyone reading your financial statements should have a clear understanding of where your startup stands financially.


Your system should be comprehensive in that it can capture all the transactions and information you need.


Finally, your financial reporting should be consistent. Each department should report in a consistent manner, and you want to create reports for your investors that are the same from month to month.




Knowing where your startup stands financially is crucial to your success. It helps you know if you’re growing, hemorrhaging money, need to market more, or where to allocate your resources.


Accurate financial reporting helps you and your investors make decisions to help your startup grow.


Want more?

Since 2006, Escalon has helped thousands of companies get off the ground with our back-office solutions for financial analysis, accounting, HR, payroll, insurance and recruiting and taxes — and we can help yours too. Talk to an expert today.

Talk to our team today to learn how Escalon can help take your company to the next level.

  • Expertise you can trust

    Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.

  • Quality and consistency

    Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.

  • Scalability and Flexibility

    Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.

Contact Us Today!

Tap into the latest insights from experts in your industry

Accounting & Finance

Q2 Business Planning: Adjusting Your Financial Strategy for the Rest of the Year

By the time Q2 rolls around, many startups have a clearer picture of their performance and market positioning compared to...

Read More
People Management & HR

5 Key HR Challenges to Address Before Summer to Keep Your Team Engaged

For many startups, the summer months can be a dual-edged sword. On one hand, warmer weather and looming vacations can...

Read More
Taxes

How to Maximize Your Tax Deductions: Essential Tips for Startups in Q2

Tax season often triggers stress and complexity—especially for startups laser-focused on building products, acquiring customers, and scaling operations. Yet savvy...

Read More
Startups

Mid-Year Financial Checkup: How to Assess and Adjust Your Startup’s Budget 

The halfway mark of any given year is more than just a date on the calendar; it’s a valuable checkpoint...

Read More
Consumer Goods

Inventory Accounting 101: Navigating Costing Methods and Their Impact on Financial Health 

For consumer goods companies, managing inventory efficiently is critical—not just for operations but also for financial health and risk management....

Read More
Technology & Security

Compliance Considerations for SaaS: Protecting Data and Staying Secure

As more businesses transition to Software-as-a-Service (SaaS) solutions, data security and regulatory compliance have become top priorities. From handling sensitive...

Read More
Accounting & Finance

How Outsourced Accounting Supports Scalability in Portfolio Companies 

For portfolio companies, whether backed by private equity, venture capital, or family offices, scalability is essential for maximizing value and...

Read More
Consumer Goods

Insights from a Consumer Goods Expert: Building Brands, Inventory Management, and the Power of Outsourcing

Insights from a Consumer Goods Expert: Building Brands, Inventory Management, and the Power of Outsourcing  In a recent conversation with...

Read More
Private Equity

The Key to Private Equity Success: Strong Financial Oversight and Compliance

Private equity deals are becoming larger and more complex, making financial preparation a critical part of the process. Take Novartis’s...

Read More